Social Enterprise: The key to inclusive progress for India
Over the last decade, even as the media celebrates India's stellar growth story, when it comes to growth at the grassroots level, the Indian economy displays a marked dichotomy. When the numbers are reckoned and the development indices tallied, the India Shining fairytale has not proved to be inclusive of all sectors. According to the latest data from Credit Suisse, the richest 10% of Indians own 76.3% of the nation's wealth, while at the lower end of the pyramid, the poor scramble for a mere 4.1%.
Where does India go wrong?
Every year, governments have touted new methods to aid poverty alleviation. The Central government plans to bring one crore households out of poverty by 2019. Despite multiple schemes, five-year plans and employment programmes the country still struggles with trickle down. There are several reasons for this:
Social Sector Spending:
India compares poorly with most other countries on social sector spending, with only 3% of GDP invested towards education and only 1.1% towards health. In comparison, South Africa spends more than twice as much on education (6.1%) and more than three times as much on health (3.7%).
Oxfam has calculated that if India prevents further widening of inequality, it could end extreme poverty for 90 million people by 2019. If it perseveres further and reduces inequality by 36%, it could virtually eliminate extreme poverty.
However, without finding innovative solutions, the mission to end extreme poverty for the 300 million Indians who live below the poverty line, will remain an unattainable goal.
The Curse of Silos:
Schemes initiated by different governments at state and central level, fail to have a significant impact simply because they function in silos, with patchy execution, a lack of accountability and inadequate infrastructure.
No systematic survey:
Poverty alleviation schemes, while catering to popular sentiments, lack in-depth planning. No systematic attempt has been made to survey poverty-stricken populations, map causes and effects, clearly determine needs and to find long-term sustainable solutions that empower the poor to sustainably climb out of the lower income bracket.
Poor resource allocation:
Often, with multiple organizations (governmental and non-governmental) working on the same issues, resources can be allocated in a myopic manner, with little consideration for the larger ecosystem. For instance, the Centre has allocated INR 200 for old age pension with the understanding that states will add to the fund. However, as this is discretionary, pensions can vary from state to state ranging from 200-1500.
Unstructured Private Spending:
Considering the sheer magnitude of the problem, private participation in poverty alleviation is not just helpful but critical to addressing the poverty gap in the country. While the past decade has seen an increasing social currency in Corporate Social Responsibility, the fact remains that even these programs have not made enough of a difference. With a lack of strategic alignment, CSR programs can often become just another page in annual reports.
Social Enterprise, a new paradigm
Social entrepreneurs launch for-profit companies in a sphere usually inhabited by not-for-profits organizations, and try to offer a product or service to under-served sections of society, in a self-sustaining manner. They essentially offer a self-sustaining solution to the wide gap between the donation-dependency of NGOs and the pure profit motive of corporates.
The benefits of Corporates partnering Social Enterprise:
No Conflict of Interest:
Social Ventures have a mission of concentrating on social impact and carrying out business in a way does not create negative externalities, so when corporates partner with them to further social good, the objectives and roles can be clearly defined without redundancies or conflict of interest.
While for a commercial enterprise, sustainability or social missions are 'nice to have' but not central to the commercial mission of the organization, a Social Enterprise begins with a strategic focus on doing good in a long-term, sustainable fashion. For instance, a Social Enterprise geared towards creating and selling low cost solar devices across rural India will not pivot to targeting urban centers for a profit motive.
While CSR is often geared towards building positive public opinion to eventually improve brand value and profits, Social Enterprises are geared towards harnessing capital for public reform in sectors ordinarily ignored by commercial enterprise. The act of doing good is both a primary motive and a measure of success.
Maximizing the impact of Social Enterprise
Grants and access to funding can only take a social enterprise so far. To really excel in a competitive landscape, Social Enterprises require the business expertise and networks that enable successful organizations to thrive. By consolidating the efforts of SEs and Companies working on the same social issues, we can see better results.
Corporate Mentorship of Social Enterprise
The non-monetary support that corporates can offer in the form of advice, mentorship and introductions to business networks can be the very boost required to help Social Enterprises achieve genuine, inclusive growth in India. Globally, this movement is being spearheaded by several organizations such as the Skoll Foundation, the Melinda Gates Foundation, Intel and the DBS Foundation.
For instance, since 2014, the DBS Foundation has been advocating for and nurturing social enterprises in India. So far, they've provided financial, non-financial resources and business procurement opportunities to over 200 social enterprises. One such example is the DBS50 Programme, which harnesses the collective experience, skills, networks and leadership of DBS's senior management and the teams they assemble to offer continuous support to the social enterprises to build their capacity. In 2017 the DBS senior management will mentor their partnered social entrepreneurs over a year-long period so that by the end of June 2018, participating SEs would have developed in at least one of the three key areas – social impact, financial sustainability, and enterprise development.
Additionally, DBS Bank's partnership with TISS in India has incubated and grown several winning social enterprises including organic farms and urban waste- management amongst others.
A model worth emulating
While there are no simple answers to how it's growing affluence can translate to greater equality, corporate India can be flagbearers in creating sustainable models of development that engage with social issues in a systematic and structured manner without the shortfalls of leakage, changing governments and the ever-fluctuating benchmark of what it means to be poor in an growing economy.